SINGAPORE, Nov 14 (Reuters) - Singapore Telecommunications
Ltd forecast its first drop in annual revenue in 14
years after it posted a weaker-than-expected quarterly profit,
hit by tough competition in its key Australian market.

SingTel, Southeast Asia's largest telecommunications firm by
market value, relies on Australian unit Optus for two-thirds of
its revenue, but competition with the likes of Telstra
has grown increasingly fierce amid slowing growth in that
country's mobile market.

SingTel said on Wednesday that it now expects a "mid-single
digit" percentage decline in Australian operating revenue for
the financial year ending March 2013, a reversal from its
earlier forecast for a low-single-digit increase.

"With the revised revenue outlook for Australia, the
consolidated revenue of the group is expected to decline by a
low-single digit level," SingTel said in a statement. SingTel
last reported a fall in annual revenue in 1998/99, Thomson
Reuters data shows.

SingTel, however, expects earnings before interest, tax,
depreciation and amortisation (EBITDA) at the group level to be
stable, in line with earlier guidance.

For its July-September quarter, SingTel, which also owns
large stakes in several mobile operators including India's
Bharti Airtel and Indonesia's Telkomsel, had
an underlying net profit of S$886 million ($725 million). That
was up only slightly from S$885 million a year earlier and
undershot the S$896 million average estimate of six analysts
polled by Reuters.

"The main issue is with Australia. It's really in the
pricing, on bundles offered on fixed line products that is
impacting top-line revenue," said Michael Wu, an equities
analyst with Morningstar in Sydney.

"We were expecting EBITDA to decline ... but they did match
their declining revenue with declining costs, so EBITDA is
stable. That's encouraging," he added.

Nomura Securities said revenue and operational trends at
Optus were weak, noting Telstra had gained market share in
Australia's mobile market after discounting the gains in
subscriber numbers following Optus's purchase of Vivid Wireless
earlier this year.

Optus, Australia's No.2 telecom after Telstra, saw revenue
drop 4 percent to A$2.24 billion ($2.34 billion) during the
quarter from a year earlier, due to price competition in mobile
phones and a mandated reduction in mobile termination rates.

SingTel shares have risen about 2 percent this year,
underperforming a 13 percent gain in the broader Straits Times
Index. The stock was down 0.6 percent at 0452 GMT, in
line with the decline in the broader index.

HOME MARKET

SingTel fared better in its home market, where revenue rose
4 percent from a year earlier to S$1.67 billion during the
quarter, helped by a strong performance from IT and engineering
arm NCS. In mobile phones, SingTel's share of the local market
rose by 0.2 percentage point from the previous quarter to 46.6
percent.

Even so, SingTel's postpaid average revenue per mobile phone
user fell about 6 percent to S$80 during the quarter as roaming
income declined amid the growing popularity of cheaper Internet
data and voice services such as WhatsApp and Viber.

SingTel's results were also hurt by the strength of the
Singapore dollar, which depressed contributions from India,
Indonesia and Thailand.

The Singapore dollar has gained 6 percent against the U.S.
dollar so far this year, the second-best performing Asian
currency after the Philippine peso among 10 currencies tracked
by Reuters.

Telkomsel, for instance, had a pretax profit increase of 26
percent in local currency terms, but this translated into a
smaller rise of 16 percent when converted in Singapore dollars.

SingTel's consolidated revenue does not include
contributions from Telkomsel, in which it has an effective stake
of about 35 percent, and other regional mobile operators because
it owns less than 50 percent of these firms.

Bharti, which is around one-third owned by SingTel, last
week reported its 11th consecutive quarter of profit declines,
with margins under pressure from intense competition.
($1 = 1.2227 Singapore dollars)
($1 = 0.9584 Australian dollars)
(Additional reporting by Naomi Tajitsu in WELLINGTON; Editing
by Chris Gallagher)

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